October 26, 2014. Some recent state and federal court decisions dealing with environmental controversies in North Carolina:
Cape Fear River Watch, et al v. Environmental Management Commission. An earlier post provides background on the issues in the case. In brief, several environmental organizations appealed a 2012 decision by the N.C. Environmental Management Commission (EMC) interpreting state groundwater rules to give older, unpermitted waste disposal facilities the same groundwater remediation options available to permitted waste disposal facilities. All of the coal ash ponds in N.C would be considered “unpermitted” waste disposal facilities and Duke Energy intervened in the Cape Fear River Watch case to support the EMC decision.
In March, Superior Court Judge Paul Ridgeway reversed part of the EMC decision. Judge Ridgeway interpreted groundwater remediation rules to require facilities permitted before December 30, 1983 to immediately remove the source of any groundwater contamination. The decision has significant implications for coal ash ponds and old, unlined landfills where the waste material disposed of in the facility often turns out to be the contamination source. Under Judge Ridgeway’s interpretation of the rules, waste material causing groundwater contamination would have to be immediately excavated and removed. Although state rules allow the use of other (potentially less costly) measures to control groundwater contamination, pre-1984 ash ponds and landfills would not have any option other than removal of the waste.
Duke Energy appealed Judge Ridgeway’s decision to the N.C. Court of Appeals. But before the Court of Appeals could take up the case, two things happened to alter the course of the litigation. First, the General Assembly enacted legislation intended to moot the Ridgeway decision. Section 12 of Session Law 2014-122 (the Coal Ash Management Act of 2014) amends a groundwater statute to direct the EMC to require remediation of groundwater contamination at a waste disposal facility without regard to the date the facility had been permitted. Legislators acknowledged that the provision was intended to reverse Judge Ridgeway’s interpretation of the groundwater remediation rules as applied to facilities permitted before December 30, 1983. As a practical matter, the new law allows DENR to approve an alternative means of controlling groundwater contamination associated with a coal ash pond or pre-1984 landfill but does not guarantee approval.
Then, on October 10, 2014, the N.C. Supreme Court issued an order removing Cape Fear River Watch v. Environmental Management Commission from the Court of Appeals docket to the Supreme Court docket. The Supreme Court removed the case on its own motion, surprising the parties and their lawyers. (The court issued similar orders in four other civil cases at around the same time.) The court’s action has no recent precedent and little precedent in the court’s history. The one-paragraph order offered no explanation for removal of the case to the Supreme Court. The next step in the Cape Fear River Watch case will now be the filing of briefs in the N.C. Supreme Court.
City of Asheville v. State of N.C. and Metropolitan Sewerage District of Buncombe County. In 2013, the General Assembly enacted a law transferring the City of Asheville’s water system to the Metropolitan Sewerage District of Buncombe County. Session Law 2013-50, drafted to apply only to the City of Asheville water system, had the unprecedented effect of transferring the system’s assets (infrastructure and a 17,000 acre watershed) and debts (over $67 million in water bonds) to a new entity without the city’s consent and without compensation. Two earlier posts, here and here, provide background on the legislative action and constitutional issues raised by the law.
In June, N.C. Superior Court Judge Howard Manning issued an order concluding that Session Law 2013-50 violated several provisions in the N.C. Constitution. Among Judge Manning’s findings:
♦ The law violated Article II, Section 24 of the N.C. Constitution which prohibits the General Assembly from adopting certain types of legislation to apply in only one jurisdiction in the state. Judge Manning concluded Session Law 2013-50 violated constitutional prohibitions against local acts relating to “health, sanitation or the abatement of nuisances” and local acts regulating nonnavigable streams. Although Session Law 2013-50 did not mention the City of Asheville or the Metropolitan Sewerage District of Buncombe County by name, it described water systems affected by the law in a way that only applied to the Asheville system. As a result, Judge Manning found the law to be an unconstitutional local act addressing health and sanitation (operation of a drinking water system) and regulation of nonnavigable streams.
♦ The law violated Article I, Section 19 by transferring the Asheville water system to a different entity without the city’s consent and without any rational basis. Article I, Section 19, known as the “law of the land” clause of the N.C. Constitution, has been interpreted to require both due process and equal protection. Judge Manning found Session Law 2013-50 violated the clause by depriving the City of Asheville of property without any rational basis, suggesting a due process violation and expressly finding a denial of equal protection.
♦ Other sections of Judge Manning’s order concluded that Session Law 2013-50 violated Article I, Section 19 and Article 1, Section 35 (a broad reservation of rights) by taking city-owned property and by doing so without providing compensation for the property.
One key to the court’s decision: operation of a water system is considered to be a proprietary rather than a governmental function. Proprietary functions don’t involve peculiarly governmental powers and could also be carried out by a nongovernmental entity. Other examples of proprietary functions would be operation of an electric utility, a recreational facility or a sports venue. With respect to proprietary functions, Judge Manning concluded that local governments have the same constitutional protection against uncompensated taking of property as a nongovernmental entity.
Judge Manning’s order did not address the city’s argument that the law also unconstitutionally interfered with contracts between the city and bondholders. The state, throughout the Attorney General’s Office, indicated an intent to appeal the decision to the N.C. Court of Appeals. A final decision by the appeals court would not be expected for about a year.
Erica Y. Bryant, et al v. United States, 11th Circuit Court of Appeals, October 14, 2014. The plaintiffs had sued the United States government seeking compensation for health problems allegedly caused by exposure to contaminated drinking water at the Camp Lejuene Marine Corps Base near Jacksonville, North Carolina. A recent U.S. Supreme Court decision in another North Carolina groundwater contamination case, Waldberger v. CTS, Inc., held that the state’s 10-year statute of repose barred a lawsuit alleging injury and property damage caused by groundwater contamination filed more than 10 years after the last act contributing to the contamination — even though the plaintiffs first learned of the contamination much later. (You can find more on the Waldberger decision in an earlier post. The same post also includes additional background on the contamination problem at Camp Lejuene.)
The N.C. General Assembly responded to the Waldberger decision by enacting a law excluding claims for property damage and personal injury related to contaminated groundwater from the 10-year statute of repose. See Session Law 2014-17. The law was written to apply to both pending cases and cases filed after its enactment. In the Bryant decision, however, the 11th Circuit Court of Appeals ruled that the new law could not retroactively apply to pending cases. The appeals court treated the 10-year statute of repose as a sort of property interest benefitting (in this case) the U.S. government. The court ruled that the state legislature could not retroactively remove that benefit. The decision turned, in part, on the court’s conclusion that Session Law 2014-17 changed rather than clarified the state’s prior law.
The 11th Circuit decision seems to leave the Camp Lejeune plaintiffs without any legal remedy for long-term health effects allegedly caused by exposure to the contaminated drinking water.